Asbestos 101

In which the professor and his wife share the secrets of low bids, high profits, and your money

When the proposals were unsealed in early 1992, MCO was the low bidder on projects B, C, and D. DPC General Contractors won the job for portions A and E. MCO's bid for its three projects amounted to $1.2 million. DPC won its two phases with a total bid of $1.1 million.

Both companies were told to begin work in April. The contracts required them to be done in 60 days. DPC finished in 64 days and sought a single change order totaling $12,000. MCO began about a week after DPC but did not complete the job until November, nearly five months late. And because the firm was still at work in August, it suffered complications arising from Hurricane Andrew. In the course of the project, Julio Otazo notified county officials he would be preparing a claim for additional compensation due to the increased time and the fact that more asbestos had been discovered than originally anticipated. County records, however, indicate that Otazo never submitted a written estimate of just how much more compensation he might have been seeking.

In February 1993 Otazo submitted his first claim: an additional $1.7 million. The aviation department sent the claim to two private consultants for evaluation. Both rejected the majority of MCO's charges. "Our analysis indicates the county may owe the contractor some additional payments on a few selected items in the claim," wrote Joseph Gaudet, vice president of the consulting firm Gaudet Associates in his August 1993 report. "However, many portions of the claim seem to be overstated in regards to quantities of materials that the contractor claims to have abated. The biggest problem we had in conducting the review is the fact that the contractor did not submit the claim until all the materials in question had been removed. This caused the conditions in question to be unobservable. This being the case, the burden of proof should lie with the contractor in verifying the amounts of material in question."

Aviation department officials notified MCO of Gaudet's findings, and the company responded this past December. Instead of addressing the consultants' objections, Julio Otazo submitted a new claim in which his demand rose from an additional $1.7 million to a staggering $7.4 million.

Wayne Blackwell, president of Wayne Blackwell, Inc. and a competitor of Julio and Cruz Otazo, was recently informed of MCO's newest claim. His reaction: "You're kidding, right? It's a joke, right?"

No joke.
New Times analyzed in detail the Otazos' complicated, 400-page claim. One aspect of the document deserves special attention: a four-month period between May and September of 1992.

Almost immediately after beginning work in April 1992, MCO's workers discovered hidden areas of asbestos on the second floor of Building 25, asbestos that was not accounted for in the original contract. The company suspended work on that portion of the building and began protracted negotiations with the aviation department regarding more pay for more work. In the meantime, MCO continued removing asbestos elsewhere in buildings 24 and 25.

It took four months of haggling, but finally the two sides reached an agreement: MCO would receive an additional $155,000 to remove the unexpected asbestos. But today, as part of his revised $7.4 million claim, Julio Otazo is also demanding payment for that four-month period when negotiations were under way and work on the second floor was suspended. Otazo wants the aviation department to pay his company $1.2 million for not working. In other words, he is asserting that it cost MCO nearly eight times more to do nothing than it did to actually remove the unexpected asbestos.

How did Otazo arrive at the $1.2 million figure? Among other things, he is charging the county $19,452 for the 23 employees and three days it took to "demobilize" the second floor. Demobilization usually occurs at the end of a job, when a contractor returns his equipment to his office or warehouse. In this case, however, MCO continued working elsewhere in buildings 24 and 25. Because of that, a complete demobilization would seem unnecessary, and indeed company employees interviewed by New Times say some of the equipment on the second floor was simply moved to other areas, not back to the company's office and warehouse. (Otazo is also charging the county another $19,452 for "remobilizing" the second floor when work resumed.)

But the cost of mobilizations is hardly worth noting when compared to the amount of equipment and manpower apparently required to oversee an area where no work took place for four months. Otazo is demanding $313,813 to maintain the second floor during that period. According to his documents, MCO needed three workers at $20 per hour, eight hours a day for 99 days to do general "upkeep" on the floor. The second floor also required the presence of a supervisor at $25 per hour, four hours a day for 99 days; a senior supervisor at $35 per hour, two hours each day for 99 days; a project manager, also at $35 an hour, for one hour each day over 99 days. Even Julio Otazo himself, at a rate of $75 per hour, was there an hour each day for 99 days to keep watch on a floor where no work was being done.

Like all airport asbestos contractors, MCO is required to keep a daily log of the work it does, a kind of job-site diary. In addition to MCO's reports, the aviation department hires a consultant to inspect job sites and file independent daily logs. Neither MCO's nor the consultant's reports during those four months make mention of any employees regularly working on the second floor. Furthermore, MCO employees who worked on buildings 24 and 25 confirm that no regular activity took place on the second floor during the time work was suspended. Once or twice each day a supervisor would check MCO's unmanned negative-air-pressure machines (a type of filter that vacuums out contaminated air) to make sure they were operating properly and to take asbestos readings. New Times asked Julio and Cruz Otazo to clarify the number of employees used in maintaining the second floor, but they refused to respond.

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